The U.S. Small Business Administration released a one-page form that aims to simplify the application process for the forgiveness of Paycheck Protection Program loans, together with revised and updated forms to meet the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month, which included $284 billion of financing to small businesses that needed loans. This money was used to offset the economic impact of the coronavirus pandemic. The package also mandated the SBA to issue streamlined forms within 24 hours of the bill being approved by the lawmaker to streamline the procedure of applying for forgiveness. The legislation also contained conditions designed to facilitate more loans from community banks, specifically for minority-owned businesses who had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the single-page form for loan forgiveness under the PPP within 24 hours of the date of enactment the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs, on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also issued the updated forms.”
First Draw PPP Conditions for loan forgiveness
Federal Student Loan Forgiveness Application Form – For eligible borrowers First Draw PPP loans are suitable to be forgiven. This is if the loan disbursement occurs within an 8 to 24 week period.
- Pay and worker levels are kept at a constant level.
- The proceeds of the loan can be used to pay payroll costs or other expenses that are eligible.
- At least 60% of proceeds are used for the cost of payroll
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for total loan forgiveness if they do so during the 8to 24-week time period after the loan’s disbursement
- The First Draw PPP loan requires that the employee and the compensation levels be maintained in an exact same way.
- The loan proceeds are used on payroll expenses as well as other eligible expenses and
- A minimum of 60% of profits are used for the cost of payroll
- How and when to apply for loan forgiveness?
When all of the loan proceeds have been used the borrower is eligible to be forgiven. Borrowers may apply for forgiveness at any point up to the date of maturity. Borrowers who don’t request forgiveness within 10 month of the expiration date of the loan will be able to receive payment from their PPP lender.